Ofgem publishes proposals to reform energy market
By Katie Anderson on October 23, 2012
Ofgem has published plans to compel energy suppliers to notify their customers of the cheapest tariffs after Prime Minister David Cameron promised to reform the energy industry.
During Prime Minister’s Questions last week, Cameron said: “I can announce that we will be legislating so that energy companies have to give the lowest tariff to their customers”.
The Prime Minister’s promise was later played down by government when it emerged that no definitive plan had been formulated. Shadow Energy Secretary Caroline Flint claimed the policy was ‘going nowhere’, whilst several consumer groups warned the plan could further stifle competition in the energy sector.
This week, Ofgem has come to the government’s rescue by proposing a way to achieve the Prime Minister’s promise. The industry regulator described its proposals as being capable of promoting a fairer, more simplified energy market for domestic customers.
Ofgem also proposed putting an end to complex tariffs, whilst all customers should be automatically switched to the cheapest tariff when fixed-term deals expire. Describing the proposals, Alistair Buchanan, the Chief Executive of Ofgem, said: “Our plans will put an end to consumers being confused by complex tariffs and will usher in a simpler, fairer and more competitive energy market for all consumers”.
Energy Secretary Ed Davey welcomed the regulator’s plans to “make bills simpler”, but Downing Street would not be drawn on the Prime Minister’s promise made last week, leading the Shadow Energy Secretary to further criticise government. Flint also attacked Ofgem for failing to “get tough with the energy giants”.
The energy industry, which is represented by Energy UK, was equally unimpressed with Ofgem, but suppliers have promised to do all they can to implement regulatory change.
Energy UK’s Chief Executive, Angela Knight, commented: “What they have here is a pretty challenging set of requirements on the companies and we will work with Ofgem and others once we have got the detail to get what is in the best interests of our customers”.
Despite generating enormous profits, the big six energy suppliers in Britain continue to raise domestic energy tariffs every year. To save money on energy bills, households are advised to improve the energy efficiency of their homes by installing loft insulation, cavity wall insulation, double glazing, condensing boilers and new central heating controls.